The credit default swap cop appears

From Bloomberg:

July 14 (Bloomberg) -- The U.S. Justice Department is investigating the market for credit-default swaps, according to Markit Group Ltd., the data provider majority-owned by Wall Street’s largest banks.

“Markit has been informed of an investigation by the Department of Justice into the credit-derivatives and related markets,” spokeswoman Teresa Chick said yesterday in an e- mailed statement in response to questions from Bloomberg News. She declined to comment on the nature of the investigation. “We will work with the Department to provide any information requested of us.”

...“I say Hallelujah that some authoritative body has finally stepped forward to investigate, in a small way, how Wall Street takes advantage of information for its own advantage,” said William Cohan, a former JPMorgan Chase & Co. investment banker and author of “House of Cards,” about the financial crisis. “The fact that they control Markit and it provides information about the prices of credit-default swaps and they’ve benefited from this for many years without any challenge or investigation was outrageous.”

Why quote Cohan?

Because of his book, "House of Cards." Most people didn't read the entire book, but they'll get thru the first chapter. The first chapter was the "The Roach Motel" which is all about credit default swaps on Bear Sterns, and the market's and Geithner's misunderstanding of them, and their power. About 100 pages later, he talks about the meeting with Jimmy Cayne, and the $70 billion that the bondholders won't lose out on, if JPM swallows Bear, and the money the firms will make, who sold the CDS protection, on Bear, while Cayne was negotiating from weakness.

Bear only agreed to the price, after it was raised to $10, because of the indemnification agreements put in place by JP Morgan. But Cohan took the story, and made it compelling, so the public would believe that the swaps are the devil incarnate.

He put it in layman's terms, so that now even Maxine Walters is an expert on swaps!

And now that Justice understands the public outrage, they are getting involved.

But who thinks anything will actually happen from them?

After all, excluding front-running, isn't this the biggest profit center of JPM and GS?